Premier Miton

AIM-listed asset manager Premier Miton (LSE: PMI) is first up.

Thanks to some great performances from its funds, the firm has been attracting more investors. By the end of March, Premier had £12.6bn in assets under management. This compares favourably to the £9.1bn by this point in 2020. At £6.2m, pre-tax profit over the last interim period came in 17% higher. 

On dividends, Premier didn’t disappoint either. It recently hiked the interim payout by 48% to 3.7p per share. Such a jump is indicative of a very confident board. Right now, the small-cap’s shares have a chunky forecast yield of 5.2%. This payout is also safely covered 1.5 times by expected profits.

Although there can be no guarantees in the stock market (and Premier’s fortunes will be dictated by some things beyond its control), I think all this makes the company a good dividend pick. Taking into account its strong financial position, the shares are reasonably priced at 13 times earnings.

Gateley

Legal services firm Gateley (LSE: GTLY) looks to be another decent income stock from the small-cap world, in my opinion. 

In last week’s trading update, the business stated that trading had “continued to improve” over H2. It’s now predicting that full-year revenue will be at least £120m — up 9.3% on the previous year. Pre-tax profits will also be up at least 8.1% to £16m.

Analysts have the company returning 7.98p per share in dividends. That becomes a yield of 4% based on last Friday’s closing share price. Again, the payout looks likely to be sufficiently covered by profits (1.6 times). Like Premier, Gately has a reassuringly large net cash position (£20m). 

As far as drawbacks go, I do need to remember that Covid-19 could continue impacting companies offering professional services. It’s also worth mentioning that the free float (the number of shares available to buy on the market) is relatively low, making it a fairly illiquid stock. This can potentially lead to big increases in the share price. Sadly, the reverse is also possible. 

H&T

Pawnbroker, gold purchaser and jewellery retailer H&T (LSE: HAT) may not be everyone’s cup of tea, but I think it has good dividend credentials.

While only a prediction, analysts have it returning 7.46p per share in FY21. That gives the lowest yield of the three income stocks discussed here (2.7%). However, H&T also has the highest amount of dividend cover (2.6 times profits). Of course, the payout could end up being better if trading goes well over the rest of the year.

Clearly, H&T’s outlook is also dependent to some extent on what happens regarding Covid. Even though the firm provides “essential financial services” and has an online presence, it really needs high streets to remain open. Based on the success of the vaccination programme so far, I’m optimistic. Even so, Boris Johnson may still end up changing his road map in June. 

On a more positive note, a strong balance sheet suggests H&T is capable of weathering further storms. A rebounding gold price won’t do any harm either.  

The post 3 secret income stocks to buy in June appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, even though this business is relatively young, it is growing like a weed, and at its current speed, it won’t be long before it graduates off AIM and moves into the big league. 

The results are in 

Today Tatton published its maiden interim results for the six-month period ended 30 September following its IPO in July. 

During the period, discretionary assets under management expanded 15% (since March 2017), and AUM grew by 33% year-on-year. Growth in AUM helped the company expand revenue by 31% to £7.3m and adjusted earnings before interest and tax lept by 56% year-on-year. 

Due to the costs associated with its IPO, Tatton reported a profit before tax of only £0.5m for the period, but going forward, IPO costs should not be repeated indicating strong profit growth in the years ahead. 

As well as robust underlying earnings growth, the firm reported a cash balance of £10.5m at the end of the period. 

Growth ahead

Tatton’s solid results have enabled management to announce today an inaugural interim dividend of 2.2p per share. This looks as if it could be a sign of things to come. 

The group is a relatively unique business as it offers on-platform-only discretionary fund management, regulatory, compliance and business consulting services to investment advisors across the UK. These services allow investment advisors to lower costs and concentrate on clients’ needs, rather than focusing on time-consuming, costly compliance issues. 

As more advisors flock to the firm’s offering, City analysts expect Tatton’s earnings per share to grow by 6% this year, and 19% for the fiscal year ending 31 March 2019. Considering the young age of the company, and the growth reported today, I believe that these could be conservative forecasts. Based on the current City estimates, however, the shares are trading at a forward (YE 31 March 2018) P/E of 20.4, which seems to me to undervalue this high-growth business. 

Reach for the stars

Over the past 12 months, shares in Gateley Holdings (LSE: GTLY) have charged higher by 55% as the law firm has improved its offering through acquisitions. Today the company announced that revenue for the six months ended 31 October grew 9.8% and adjusted EBITDA expanded 6.3%. Substantial investment in its client offering held back the group’s overall performance. 

Still, for the full year City analysts are predicting earnings per share growth of 13%, followed by an increase of 7% for the fiscal year ending 30 April 2019. On the back of these forecasts, the shares are trading at a forward P/E of 15.8 falling to 14.9. Considering the company’s steady earnings growth, a mid-teens multiple seems to me to be suitable for the shares. 

I believe the outlook for the group is bright because the market for professional services (it provides legal advice to the financial, corporate and property sectors) has only grown for the past few decades, and it does not look as if this trend will end anytime soon. And as financial sector regulation becomes more complex, it should be able to capitalise on this opportunity.

As well as steady growth, it also supports a dividend yield of 4.2%.

The post 2 small-cap growth stocks that could still make you fabulously wealthy appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.